Hello, I’m Michael, and it’s great to have you here at AGM, the hub for everything in private markets. Excitedly, I’m introducing my weekly newsletter, the AGM Alts Weekly. Each Sunday, dive into the latest news, trends, and insights surrounding the dynamic shifts and innovations within private markets. In this newsletter, you’ll find curated news articles, thoughtful commentary, an index of publicly traded alternative asset managers, job openings, podcasts, and insightful pieces from the Alt Goes Mainstream platform.
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Good morning from Washington, DC.
In the recent AGM Post of the Week, I highlighted a significant piece from Morningstar’s LinkedIn post. Their Voice of the Advisor survey provides pivotal insights and actionable advice for asset managers to remain relevant and top-of-mind for advisors. The survey’s conclusion delivers significant reflections for asset managers.
Morningstar captured attention with their frank assessment in the survey recap, stating plainly, “factsheets and sandwiches [are] becoming stale for asset managers.” For asset managers, dissecting these survey insights can prevent them from becoming obsolete in the vibrant sphere of private markets.
The survey reveals that advisors appreciate strategic, broad-scope discussions centered around objective analysis and comprehensive portfolio construction rather than mere product pitches.
This revelation is crucial for asset managers. Investors face “option overload,” according to Morningstar, making education, brand establishment, and a consultative sales approach—highlighted through deep product knowledge—vital in today’s competitive distribution environment.
As the plethora of products grows, with traditional managers expanding into the realm of alternative asset managers through manufacturing, partnerships, or acquisitions, attracting advisor attention is crucial, but capturing and maintaining it is even more vital.
A focal point of Morningstar’s survey emphasizes service excellence, which includes providing quality information, effective communication, sound advice, and expert insights. Distributing private market products through wealth channels is notably challenging.
In a January 2024 FT article, Franklin Templeton’s CEO, Jenny Johnson, outlined the intricacies and hurdles of working with wealth channels, referring to it as a strategic exercise requiring the alignment of products with channel needs, persuading gatekeepers, and educating one’s sales force.
In another response on 1.7.24 AGM Alts Weekly, I articulated the importance of distribution talent in private markets with a focus on wealth channels as a crucial factor enabling alternatives to mainstream adoption.
The industry is taking notice. Bain & Company’s Global Private Equity Practice Chairman, Hugh MacArthur, highlighted that those concentrating on alternatives distribution, especially the traditional asset managers’ sales forces, need education about private markets.
Selling alternative products is distinctively consultative compared to selling mutual funds and ETFs. The illiquidity of alternatives sets them apart. Advisors, allocating client capital, often commit to longer time horizons, sacrificing liquidity for diversification and potential returns, creating a demand for a higher degree of trust in the provider.
Such characteristics make distributing private market products a consultative process, incorporating alternatives into holistic portfolio strategies—sometimes within model portfolios.
Wealth managers express a preference for a more consultative sales tactic. An October 2024 survey from Broadridge and MMI identified that 83% of wealth managers prefer alternatives integrated into overall portfolios, contrary to 65% of asset managers.
This disparity between buyers and sellers might explain why 74% of wealth managers urge asset managers to hire more product specialists, a notable increase from 38% in 2023.
Encouragingly, six out of ten asset managers intend to enhance investments in this area, incorporating more product specialists in alternative investments.
Not long ago, the NFL’s tight end position was often overlooked in offensive playbooks. Possessing neither the speed of a wide receiver nor the size for serious blocking duties, tight ends seemed stuck in a limbo. But evolution is relentless. Larger wide receivers gradually transitioned to tight ends, introducing athleticism to the role and transforming it. Offensive strategists soon realized another potent weapon was at their disposal, one capable of changing the game.
Modern tight ends, embodying both speed and strength, are now crucial against defenders over the middle of the field, effortlessly outpacing linebackers and overpowering cornerbacks and safeties.
Stephen Holder’s September 2024 ESPN article, “How tight ends like Travis Kelce helped reshape the position,” emphasizes this transformation through the lens of Travis Kelce, among the NFL’s greatest tight ends. Kelce (also known for dating Taylor Swift) remarked, “Being involved offensively and playmaking while also facilitating opportunities for others makes the entire game engaging.”
Holder explores this metamorphosis, noting how these players, once lost in the positional riddle as ‘tweeners,’ now shine prominently in modern playbooks.
Draw a parallel to the investment product specialist’s role in private markets distribution: akin to the adaptive enhancement witnessed in NFL offenses, investment product specialists will become critical in crafting and translating investment narratives in the wealth channel. Heads of Wealth Distribution will recognize their vital role in fostering connections and aligning sales efforts, drawing from the lessons of the tight end evolution.
Positioned at the intersection of investment, marketing, and distribution, investment product specialists bring investment strategies into focus for a broad audience. Their nuanced understanding aids in creating instructional narratives and meaningful connections within the wealth channel.
The industry can learn from enterprise software sales, where the influence of product marketing managers (PMMs) proves vital. Companies like IBM, Meta, and Niantic place PMMs at the confluence of product development, marketing, and sales, echoing the cohesive role investment product specialists perform.
McKinsey & Company’s May 2024 article highlights the growing importance of software product marketing managers, emphasizing their crucial role in product launches and sales. Companies with formal PMM functions often exhibit superior growth, revealing a correlation between organizational success and PMM integration.
Similarly, alternative asset managers might consider injecting PMM expertise into their talent pool. These roles, bridging investment rigor and marketing insight, create a holistic product understanding vital for integrating increased client allocations into private markets.
Investment product specialists occupy the critical juncture, linking investment, marketing, and distribution teams. Drawing inspiration from their enterprise software counterparts, these specialists translate investment knowledge into effective sales strategies.
Private equity’s pursuit of retail wealth continues to accelerate, as noted in PitchBook’s Leah Hodgson’s coverage. Despite this focus, apprehension persists among individual investors. A Financial Planning Association survey reflected cautious private equity recommendations among advisors, highlighting the challenges infiltrating the wealth channel.
Nonetheless, ongoing investments and educational endeavors are expected to elevate individual investor commitments toward private markets. Preqin and Bain & Company’s analyses forecast significant growth in private equity assets under management—and wealth channels are slated to serve as pivotal contributors to this upward trajectory.
As the role of investment product specialists strengthens within this landscape, it will enable asset managers to adeptly navigate wealth clientele, merging traditional and alternative market approaches.
Equipped with an understanding of complex transaction models and client-centered sales strategies, these specialists are fundamental to successfully bridging private product distribution gaps.
Embrace the evolving opportunities. As the wealth channel matures, investment product specialists will continue to redefine the boundaries of private markets engagement—just as athletic, reimaged tight ends have redefined NFL narratives.
Together, we venture into uncharted territories of wealth integration, strategically deploying skillsets and innovations that echo the evolution occurring across market sectors. Join the dialogue and journey, where the synergy of finance and forward-thinking illuminates our path.
